◈ GLOSSARY · BUSINESS & ENTREPRENEURSHIP
Customer LTV (Lifetime Value).
A definition, in plain English — with the books that teach it.
Reviewed by ClearValue Editorial Team · Jun 27, 2026
◈ DEFINITION
What it means
Definition
LTV is the total gross profit you expect to earn from a customer over their entire relationship with you. A common shortcut: average revenue per customer × gross margin / churn rate. The honest caveat: it's a forecast that compounds assumptions, so early-stage LTV numbers are usually optimistic.
◈ IN PRACTICE
Example
A SaaS product charges $50/month, has 80% gross margin, and 3% monthly churn. LTV ≈ $50 × 0.80 / 0.03 = $1,333. If CAC is $400, LTV:CAC is 3.3x — a healthy ratio.